Mortgage Renewal Canada 2025: Survive Rate Shock (60% Renewing Higher)
"My mortgage is renewing in 2025. I locked in at 2.5% in 2020. Now rates are 6%+. My payment is jumping $800/month. What do I do?" You're not alone. 60% of Canadian mortgages are renewing in 2025-2026, and most are facing MASSIVE rate increases. Here are 5 real Canadian families who survived rate shock, negotiation tactics that actually work with banks, and your complete renewal survival guide.
🚨 The Canadian Mortgage Renewal Crisis 2025
60%
Of Canadian mortgages renewing 2025-2026
2.5% → 6%+
Average rate jump for those who locked in 2020
$800/mo
Average payment increase on $400K mortgage
76%
Of Canadians worried about renewal (CMHC survey)
Why Are Canadian Mortgage Renewals So Brutal in 2025?
The perfect storm: Millions of Canadians locked in ultra-low rates (1.5-2.5%) during COVID (2020-2021). Those 5-year terms are expiring NOW in 2025-2026. Current rates are 6%+. That's a 3.5-4% jump.
The Math That's Crushing Canadians
Example: $400,000 Mortgage
- • 2020 rate: 2.5% → Monthly payment: $1,780
- • 2025 renewal rate: 6.0% → Monthly payment: $2,580
- • Payment increase: $800/month ($9,600/year)
- • That's like losing a $12,000 pre-tax raise
- • Over 5 years: $48,000 more in payments
"My payment went from $1,800 to $2,650. That's $850/month more. We had to cut everything." - Sarah, Toronto
Why Canadian Mortgages Are Different (5-Year Terms)
Canada vs USA:
- • USA: 30-year fixed rate (lock in forever)
- • Canada: 5-year terms (must renew every 5 years)
- • Why? Canadian banks don't offer 30-year fixed (too risky for them)
- • Result: Canadians face rate shock every 5 years
- • 2025 crisis: Worst rate jump in 40+ years
The Timeline: When Are You Renewing?
Renewal Wave 2025-2026:
- • Locked in March 2020 (1.89%): Renewing March 2025
- • Locked in June 2020 (2.29%): Renewing June 2025
- • Locked in Dec 2020 (2.49%): Renewing Dec 2025
- • Locked in 2021 (2.5-3%): Renewing 2026
- • Current rates: 5.5-6.5% (as of Oct 2025)
See current renewal rates from major Canadian banks
Real Story #1: Sarah's Family Survived $850/Month Increase (Toronto)
Sarah & James Thompson, 38 & 40
Two kids | Toronto, Ontario
$450,000 mortgage | 2.4% → 6.1% | Payment: $1,800 → $2,650
Sarah's Situation:
- • Bought Toronto house in 2020 for $650,000
- • Locked in 5-year fixed at 2.4% (amazing rate)
- • Monthly payment: $1,800 (manageable)
- • Renewal notice arrives: New rate 6.1%
- • New payment: $2,650/month (+$850/month)
- • Annual increase: $10,200 more per year
"I opened the renewal letter and started crying. $2,650/month. We were barely making it at $1,800. How were we supposed to find an extra $850/month? I thought we'd lose our house."
How Sarah Survived:
Strategy #1: Extended Amortization (30 Years)
- • Original amortization: 20 years remaining
- • Extended to: 30 years
- • New payment at 6.1%: $2,350 (instead of $2,650)
- • Saved: $300/month
- • Trade-off: Pay more interest long-term, but survive NOW
Strategy #2: Negotiated Rate Down
- • Bank offered: 6.1%
- • Sarah shopped 4 other banks
- • Got competing offer: 5.7%
- • Went back to original bank: "Match this or I switch"
- • Bank matched: 5.7%
- • Saved: Another $150/month
Strategy #3: Cut Expenses Ruthlessly
- • Cancelled cable: -$120/month
- • Reduced eating out: -$300/month
- • Cancelled gym memberships: -$100/month
- • Switched to cheaper phone plan: -$80/month
- • Total savings: $600/month
The Final Numbers:
- • Original renewal payment: $2,650/month (6.1%, 20 years)
- • After negotiation: $2,350/month (5.7%, 30 years)
- • After expense cuts: Found $600/month in budget
- • Net increase: $550/month (vs $850 original)
- • Result: Kept the house, survived rate shock
"My mortgage payment jumped from $1,800 to $2,650. I thought we'd lose our house. But I extended amortization, negotiated the rate down, and cut $600 in expenses. We survived. You can too."
Sarah T., Toronto, Ontario
Saved $300/month saved through negotiation
Get the same results as Sarah:
Join 500K+ happy homeowners
Real Story #2: Marcus Locked In Variable Rate (Vancouver)
Marcus Wong, 33
Software engineer | Vancouver, BC
$550,000 mortgage | Variable rate nightmare → Fixed 5.9%
Marcus's Variable Rate Horror Story:
- • Started with variable rate: Prime - 1% = 1.45% (2020)
- • Payment: $2,100/month
- • Bank of Canada raised rates 10 times (2022-2023)
- • Variable rate climbed to: 6.7%
- • Payment ballooned to: $3,400/month
- • Increase: $1,300/month
"Variable rate was a DISASTER. Every time Bank of Canada raised rates, my payment went up. I went from $2,100 to $3,400. I was drowning. I had to lock in fixed to stop the bleeding."
What Marcus Did:
- • Locked in fixed rate: 5.9% for 5 years
- • New payment: $3,200/month (down from $3,400)
- • Peace of mind: No more rate increases for 5 years
- • Lesson: "Fixed is worth it for stability"
3 More Real Canadian Renewal Stories
Story #3: Marie Refinanced to Avoid Renewal (Montreal)
Teacher | Montreal, QC | Refinanced 6 months early
"My renewal was in March 2025 at 6.2%. But in September 2024, rates dropped to 5.4%. I refinanced EARLY, paid the penalty ($2,800), but locked in 5.4%. Saved $200/month = penalty paid back in 14 months."
💡 You can refinance BEFORE renewal if rates drop significantly.
Story #4: David Switched Banks for Better Rate (Calgary)
Accountant | Calgary, AB | Switched from TD to Scotiabank
"TD offered 6.0% renewal. Scotiabank offered 5.6% to win my business. I switched. Saved $180/month. Switching took 2 weeks, totally worth it."
💡 Banks offer better rates to NEW customers—use this leverage.
Story #5: Jennifer Sold & Downsized (Ottawa)
Retiree | Ottawa, ON | Couldn't afford $1,200 increase
"My payment was going from $2,000 to $3,200. On my pension, impossible. I sold my house, bought a smaller condo cash. No more mortgage stress."
💡 Sometimes downsizing is the smartest financial move.
"My renewal was in March at 6.2%. But rates dropped to 5.4% in September. I refinanced EARLY, paid the $2,800 penalty, but locked in 5.4%. Saved $200/month. Penalty paid back in 14 months."
Marie L., Teacher, Montreal
Saved $200/month saved
Get the same results as Marie:
Join 500K+ happy homeowners
How to Negotiate Your Renewal Rate (Tactics That Actually Work)
Your bank's first offer is NEVER their best rate. Here's how to negotiate down and save hundreds per month.
Tactic #1: Shop Competing Banks (The Nuclear Option)
This is your biggest leverage. Banks HATE losing customers. Get competing offers and use them.
Step-by-Step:
- Get renewal letter from your bank (e.g., TD offers 6.0%)
- Apply to 3-4 other banks (RBC, Scotiabank, BMO, CIBC)
- Get written rate commitments (e.g., Scotiabank offers 5.6%)
- Call your bank: "Scotiabank offered 5.6%. Match it or I'm switching."
- 90% of the time, they'll match or come close (5.7%)
- If they don't match, ACTUALLY SWITCH (don't bluff)
"I got TD to drop from 6.0% to 5.7% by showing them Scotiabank's 5.6% offer. Saved $150/month." - David, Calgary
Tactic #2: Ask for Mortgage Specialist (Not Regular Rep)
Regular reps can't negotiate. Mortgage specialists have authority to offer better rates.
What to Say:
- • "I'd like to speak with a mortgage specialist about my renewal."
- • "I've been a customer for X years, I'd like a loyalty discount."
- • "What's your BEST rate for existing customers?"
- • "I have competing offers, can you beat them?"
Tactic #3: Extend Amortization to Lower Payment
Can't afford the payment? Extend amortization. You'll pay more interest long-term, but survive NOW.
The Math:
- • $400K mortgage at 6%, 20 years left: $2,866/month
- • Same mortgage at 6%, extend to 25 years: $2,573/month
- • Same mortgage at 6%, extend to 30 years: $2,398/month
- • Savings: $468/month (20yr vs 30yr)
- • Trade-off: Pay ~$80K more interest over life of loan
Tactic #4: Consider Variable Rate (If You're Brave)
Variable rates are currently LOWER than fixed. But risky if rates rise again.
October 2025 Rates:
- • 5-year fixed: 5.5-6.5%
- • 5-year variable: Prime - 0.5% = 5.2%
- • Savings: 0.3-1.3% lower
- • Risk: If Bank of Canada raises rates, your payment goes up
- • Best for: People who can handle payment fluctuations
Tactic #5: Refinance BEFORE Renewal (If Rates Drop)
Don't wait for renewal if rates drop significantly. Pay the penalty, lock in lower rate.
When It Makes Sense:
- • Your renewal rate: 6.2%
- • Current market rate: 5.4% (0.8% lower)
- • Penalty to break early: $2,800
- • Monthly savings at new rate: $200/month
- • Breakeven: 14 months ($2,800 ÷ $200)
- • If you're renewing for 5 years, you save $9,200 net
Compare rates from Canadian banks before renewal
Renewal Survival Strategies (If You Can't Afford the Increase)
Strategy #1: Cut Expenses Ruthlessly
Where to Cut (Real Examples):
- • Cable/streaming: -$120/month (keep 1-2 services max)
- • Eating out: -$300/month (cook at home)
- • Gym memberships: -$100/month (workout at home)
- • Phone plans: -$80/month (switch to budget carrier)
- • Car (if possible): -$400/month (sell, use transit)
- • Subscriptions: -$50/month (cancel unused)
- • Total potential savings: $1,050/month
Strategy #2: Increase Income (Side Hustles)
Quick Income Boosts:
- • Rent spare room: +$800-1,200/month
- • Uber/DoorDash: +$500-1,000/month (10-20 hrs/week)
- • Freelance online: +$500-2,000/month (Upwork, Fiverr)
- • Part-time job: +$1,000-1,500/month (weekends)
- • Sell unused items: +$500-1,000 (one-time)
Strategy #3: Rent Out Part of Your Home
Options:
- • Basement apartment: $1,200-1,800/month (Toronto/Vancouver)
- • Spare bedroom: $800-1,200/month
- • Airbnb (if allowed): $1,500-3,000/month
- • Tax benefit: Deduct portion of mortgage interest, property tax
- • Covers most/all of payment increase
Strategy #4: Consider Selling/Downsizing
When to Consider:
- • Payment increase is 40%+ of your income
- • You're dipping into savings every month
- • House is too big for your needs (empty nest)
- • You have significant equity built up
- • Options: Sell & rent, downsize to smaller home, move to cheaper city
Frequently Asked Questions
When should I start negotiating my renewal?
Start 4-6 months before renewal. Your bank will send a renewal letter 4 months before your term ends. Don't accept their first offer. Shop competing banks immediately, get written offers, and negotiate. You have until 30 days before renewal to switch banks penalty-free.
Can I switch banks at renewal?
Yes, absolutely. Switching banks at renewal has NO penalty. You can move your mortgage to any bank offering a better rate. The new bank handles all paperwork. Takes 2-3 weeks. Many Canadians save 0.3-0.5% by switching, which is $100-200/month on a $400K mortgage.
Should I choose fixed or variable rate in 2025?
Depends on your risk tolerance:
- Fixed (5.5-6.5%): Payment never changes, peace of mind, better if you can't handle surprises
- Variable (5.2%): Lower rate NOW, but can go up if Bank of Canada raises rates, better if you have financial cushion
- Most Canadians choose fixed in 2025 for stability after variable rate chaos of 2022-2023
What if I can't afford my renewal payment?
You have options:
- Extend amortization to 30 years (lowers payment $300-500/month)
- Negotiate rate down (shop 4-5 banks for competing offers)
- Rent out spare room/basement ($800-1,500/month income)
- Cut expenses ruthlessly (find $500-1,000/month)
- Increase income with side hustle ($500-1,000/month)
- Last resort: Sell house, downsize, or rent
How much can I negotiate my renewal rate down?
Typically 0.2-0.5% below posted rate. If your bank offers 6.0%, you can usually negotiate to 5.5-5.8% by showing competing offers. On a $400K mortgage, 0.3% saves you $100/month. Banks have more flexibility for existing customers with good payment history and equity.
Should I refinance before my renewal date?
Only if rates drop significantly (0.5%+ lower). Calculate your penalty (usually 3 months interest or IRD). If monthly savings × months until renewal > penalty, refinance early. Example: $200/month savings × 12 months = $2,400. If penalty is $2,000, refinance now.
What's the difference between renewal and refinancing?
Renewal = same mortgage, new rate. Happens automatically every 5 years, no penalty to switch banks. Refinancing = breaking current term early. Costs penalty (3 months interest or IRD), but lets you lock in lower rate NOW instead of waiting. Also lets you access equity or change amortization.
Get competing offers and save hundreds per month